Tezos lawsuit to move forward in the US despite jurisdiction dispute
Where do you settle a dispute over an initial coin offering (ICO) for a company based in Zug, Switzerland, which sold tokens in Alderney in the British Channel Islands, to a lead investor in Arizona?
This is the riddle currently facing a District Judge in . . . . San Francisco.
The dispute centres on the Tezos Foundation, which raised $232m in its ICO last year. The litigants in the lawsuit claim the foundation promised them Tezos tokens, but reneged on the deal.
While the claim appears simple enough, the suit has been thrown into confusion over jurisdictional issues. The foundation asserts that the ICO investors had agreed that any legal disputes would be heard by a court in Zug.
It also argues that the ICO transactions, which were eventually paid in ethereum and bitcoin, had taken place in the British dependency of Alderney, the site of the company’s technology centre.
Yet, the litigants claim the lead investor in the lawsuit participated in the offering using a website hosted on a server based in Arizona, and run by a company whose founders live in California.
Case to proceed in San Francisco
San Francisco District Judge Richard Seeborg said that while these jurisdictional disputes were likely to re-emerge later in the case, the case should proceed before him.
“Try as the Foundation might to argue that all critical aspects of the sale occurred outside of the United States, the realities of the transaction are that the lawsuit’s lead investor participated in the ICO using a website hosted on a server in Arizona, run by a company founder in California, and based on marketing that almost exclusively targeted United States residents,” the judge said.
The Tezos Foundation was launched originally as Dynamic Ledger Solutions (DLS) by husband and wife team Arthur and Kathleen Breitman in Northern California. The Breitmans, Tezos and DLS are the defendents in the case.